7 Mistakes Dentists Make When Buying a Dental Practice
Purchasing a dental practice can be one of the most significant investments of a dentist's career, but it’s also a process fraught with potential missteps. Here are seven common mistakes dentists make when buying a dental practice and how to avoid them.
1. Waiting Too Long to Get Started
Many dentists delay the process due to fear and uncertainty, missing out on years of potential income. On average, an owner earns significantly more than an associate, potentially over $10,000 more per month. Delaying ownership means delaying financial gains and prolonging loan repayment. Even if you're not ready to buy immediately, starting the search can set you up to make a purchase when the right practice becomes available.
2. Not Looking Hard Enough
Some dentists complain about a lack of options without actively searching. Finding the right practice often requires contacting multiple brokers, networking with other dentists, and exploring less conventional channels. Don’t rely on a single broker or passive "ear-to-the-ground" listening; take the initiative to look beyond traditional sources and increase your chances of finding the ideal practice.
3. Choosing the Wrong Size Practice
Dental practices vary widely in size and patient volume. A practice producing $300,000 annually will offer a different work pace and income potential than a $1.5 million practice. The wrong-sized practice can impact your daily work style, earnings, and growth potential. If you’re excited about marketing and patient growth, a smaller practice might be a great fit. If you prefer focusing on treatment without a heavy marketing load, consider a larger practice with an existing patient base.
4. Ignoring Hygiene Size
The hygiene schedule reflects the strength of a practice’s patient base. When a dentist leaves, the treatment they were handling doesn’t automatically stay — but the hygiene patients will if they’re loyal to the practice. A well-populated hygiene schedule suggests a steady flow of patients and potential treatment opportunities. Check the recall exams or hygiene schedule frequency to gauge the number of active patients, which can serve as a benchmark for expected revenue.
5. Overlooking the Previous Dentist’s Procedure Mix
Understand the services the previous dentist provided. If they focused heavily on specialty procedures (like implants or orthodontics) and you’re more comfortable with general dentistry, there may be a drop in production after you take over. Assess whether the procedure mix aligns with your skills and interests. Also, be cautious of practices where the previous dentist may have been over-treating or offering non-standard services (like Botox or skincare), which you might not continue.
6. Neglecting the Insurance Mix
The insurance mix of a practice affects revenue potential and patient retention. Practices with a high percentage of cash or private insurance patients offer higher reimbursement rates but may also have less patient loyalty. In contrast, practices with many Medicaid or HMO patients tend to have lower reimbursement rates but more stable patient bases, as these patients have fewer provider options. Understanding a practice’s insurance mix helps you anticipate both income and patient stability.
7. Not Getting Professional Help
Buying a dental practice is a complex process and potentially the most expensive purchase you’ll ever make. Don’t attempt it solo. Practice brokers represent sellers, so having your own advisors (accountants, attorneys, or consultants with dental experience) can save you costly mistakes. Professional guidance can also help you get into ownership sooner, accelerating your financial return on investment.
Conclusion
Buying the right practice is life-changing for your career and finances, but only if you avoid these common mistakes. Get started early, search thoroughly, choose the right-sized practice, and don’t go it alone.
